Core Viewpoint - UK Prime Minister Keir Starmer is facing the most severe political crisis since taking office, triggered by the late American financier Jeffrey Epstein, despite having no direct connection to the scandal [1][2]. Group 1: Political Crisis and Market Impact - The political turmoil has led to a significant rise in UK government bond yields, with betting markets predicting a high likelihood of Starmer's resignation by the end of June [1][2]. - The Labour Party's support has dropped to 19%, with Starmer's approval ratings falling below those of former Prime Minister Liz Truss during her crisis [2][3]. - The internal Labour Party elections typically take about two months, and there is currently no clear frontrunner, which adds to market uncertainty [1][2]. Group 2: Comparison with Previous Political Events - The current market response differs fundamentally from the 2022 Truss crisis, where a budget led to soaring bond yields and a plummeting pound; recent fluctuations have not reached such extremes [3][5]. - Starmer's closed-door meeting with Labour MPs indicated he performed well, suggesting he may not be forced to resign imminently [3]. Group 3: Ongoing Risks and Uncertainties - The potential for a more left-leaning successor could lead to fiscal policies that raise market concerns, prolonging uncertainty for bond traders [5]. - The stability of the UK bond market remains fragile, with the upcoming local elections in May and the ongoing Epstein scandal likely to maintain political uncertainty [5].

Core Insights - The UK North Sea oil and gas industry faced significant challenges in 2025, marking the most difficult year since the 1960s when hydrocarbons were first discovered in the region [1] - Production from mature fields continued to decline, and uncertainties regarding government policy led to reduced investments and frozen plans among operators [2] - Exploration activity in the UK North Sea reached an all-time low, with no exploration wells drilled in 2025, a first since 1960, due to unpredictable fiscal policies [3] Investment Climate - The UK oil and gas industry received clarity on the fiscal regime at the end of 2025, but the windfall tax remained unchanged until 2030, which the industry argues is detrimental [4][5] - The total tax rate, including the windfall tax of 78%, is seen as excessively burdensome, leading to concerns about the industry's viability and its supply chain [5][6] - The Energy Profits Levy (EPL) was triggered by oil prices above $76 per barrel or natural gas prices above 59 pence per therm, with gas prices remaining above the threshold, resulting in a 35% windfall tax on profits [6] Industry Sentiment - The sentiment within the industry is pessimistic, with expectations that continued declines in investment and exploration could lead to increased reliance on oil and gas imports, exposing the UK to volatile international markets [7] - The windfall tax, initially introduced during the 2022 energy crisis and extended under the current government, is expected to eliminate non-essential investments in the UK shelf, as companies may seek friendlier tax jurisdictions [8] - Industry leaders have criticized the government's decision to maintain the windfall tax, stating it has cost the UK £50 billion in potential investments and jeopardized jobs and industries [9]

Core Insights - The price of spot gold has experienced a significant drop of nearly $500 in just seven trading days after reaching a historical high, reflecting market volatility [1] - Central banks globally have been purchasing gold in large quantities, contributing to record high gold prices earlier this year, but recent fluctuations have raised concerns [1] - The former governor of the Philippine central bank highlighted that the country's gold holdings are above the ideal range, suggesting a potential need to sell gold if prices decline [1][2] Market Trends - Gold prices surged past the $4000 mark but quickly retreated, causing market disturbances [1] - The current economic environment, characterized by trade tensions and technical overbought conditions in the gold market, has led to increased interest in gold from both central banks and retail investors [1] - Despite the recent price drop, factors such as slowing economic growth, Federal Reserve rate cuts, and a weakening dollar may continue to support gold prices [1] Price Data - As of October 30, 2023, the spot gold price was reported at $3969.59 per ounce, reflecting a 1.04% increase [3]

Group 1 - The Governor of the Bank of England, Bailey, stated that uncertainty in fiscal policy has also impacted the term premium on bonds [1]

Core Viewpoint - The Japanese bond market is experiencing significant turmoil due to political uncertainty and fiscal concerns, with the 10-year bond yield surpassing critical levels, indicating heightened market anxiety [1][3]. Group 1: Bond Yield Movements - On July 15, the 10-year Japanese government bond yield rose by 2.5 basis points to 1.595%, the highest level since 2008 [1]. - The 20-year bond yield increased by 3.5 basis points to 2.64%, while the 30-year yield rose by 4 basis points to 3.195%, both reaching levels not seen since 1999 [1]. - Yields on bonds with maturities of 20 years and above have cumulatively increased by at least 20 basis points this month [1]. Group 2: Political Context and Market Reactions - The rise in yields is occurring just before the Japanese House of Councillors election on July 20, with concerns that the ruling coalition may lose, potentially leading to a significant shift in fiscal policy [3][4]. - Analysts warn that a large-scale sell-off by "bond vigilantes" could lead to market turmoil similar to the UK's "Truss moment" in 2022, which was triggered by aggressive tax cuts [3][4]. - The ruling Liberal Democratic Party and its coalition partners face declining support in polls, raising fears of increased fiscal deficits and diminished investor confidence in bonds [4][5]. Group 3: Economic Implications - The rise in the 10-year yield is particularly concerning as it directly affects the cost of financing for businesses and households, potentially impacting economic activity [3][4]. - Economists emphasize that while long-term bonds have limited impact on corporate financing, the sustained increase in the 10-year yield warrants close attention, especially given the uncertain fiscal health [3][4]. Group 4: Global Context - The increase in Japanese bond yields is part of a broader global trend, with long-term government bonds worldwide experiencing declines as investors worry about government spending exceeding sustainable levels [6]. - The rise in yields for Japanese bonds of 20 years and longer is seen as part of a global bond sell-off, with concerns about fiscal conditions driving investor behavior [6].

Investment Rating - The report does not provide a specific investment rating for the steel and commodity industry [5] Core Insights - The report discusses how a civilian prediction indicator has become an "invisible driver" of asset prices, particularly in the steel and commodity sectors. It highlights the strong correlation between the "U.S. recession expectation" and various asset markets, including commodities, bonds, stocks, and foreign exchange [10][11] - The report emphasizes the importance of integrating this prediction indicator with traditional economic data and policy interest rate curves for more comprehensive asset allocation [6][10] Summary by Sections Recent Trends - The steel industry has shown a performance of -1.9% over the last month, -8.7% over the last three months, and 7.6% over the last year, compared to the CSI 300 index which has seen -0.4%, -3.3%, and 9.4% respectively [4] Asset Linkage Commodity Market - The report notes a significant rise in silver prices and a strong synchronization between the gold-silver ratio and the "U.S. recession expectation." It suggests that when recession probabilities decrease, silver, which has more industrial properties, tends to outperform gold [12] - The report also mentions that the crude oil VIX has shown a close correlation with the "U.S. recession expectation," indicating that market predictions of oil price volatility are influenced by recession expectations [12] Bond Market - The report indicates that when the "U.S. recession expectation" rises, the 10-year U.S. Treasury yield tends to weaken, although recent trends show some divergence. The 10-2 year yield spread has shown a complex relationship with recession probabilities [15] Stock Market - The report highlights a strong negative correlation between the "U.S. recession expectation" and the S&P 500 index, suggesting that rising recession expectations directly impact corporate profit outlooks [21] - It also notes that the Russell 2000 to S&P 500 ratio has not returned to early-year highs despite a temporary decline in recession expectations, reflecting ongoing concerns about long-term corporate profitability due to tariff policies [21] Foreign Exchange Market - The report states that the U.S. dollar index has mostly moved inversely to the "U.S. recession expectation," although a gap has emerged since May, potentially linked to U.S. fiscal risks and trade policy uncertainties [22] - The report also mentions that the USD/JPY exchange rate tends to weaken when recession expectations rise, indicating a flight to the Japanese yen as a safe-haven asset [22]

Core Viewpoint - The recent surge in gold prices is attributed to a significant drop in the US dollar index and rising market fears due to uncertainties in US fiscal policy [1][2] Group 1: Market Dynamics - Gold prices continued to rise, reaching $3310.61 per ounce with a 0.63% increase [1] - The US dollar index fell to a two-week low of 99.42, reducing the cost of holding gold priced in dollars, which has stimulated buying interest from European and Asian investors [2] - Concerns over the US economy, including a potential recession and the impact of trade tensions, have contributed to the dollar's decline [2] Group 2: Political Factors - The Trump administration is pushing for a comprehensive tax cut plan worth trillions, but there are significant divisions within the Republican Party, with at least five senior members opposing the current version due to fears of increasing the fiscal deficit [2] - The political struggle surrounding the tax cut plan raises concerns about a potential government shutdown if the legislation fails, prompting investors to seek refuge in gold [2] Group 3: Technical Analysis - Gold opened at around $3290 and has broken through previous resistance levels, indicating a bullish trend [3] - Key support levels for gold are noted at $3278-85, with short-term resistance at $3315-21 and significant resistance at $3340-45 [3] - The critical threshold for determining market strength is identified at $3253-60, with a bullish outlook maintained as long as prices stay above this level [3]